Business Rates And Property Developments: Mixed News For Property Developers

Year Published: 2017

For property developers it’s been a mixed bag of news with recent cases reflecting both positive and negative decisions for their industry.

Business rates for property developers – the positive news:

Following the recent business rates revaluation many businesses are reeling about the new rates they will have to pay from 1 April 2017.

Developers have been cheered by a recent Supreme Court decision on 1 March 2017. In the case of Newbiggin (Valuation Officer) v SJ & J Monk (a firm) the property in question was listed as “offices and premises” but SJ & J Monk proposed that this be changed to “building undergoing reconstruction” as the property could not be occupied. The dispute was taken to the Supreme Court which decided that, where a property is undergoing reconstruction on the relevant valuation date, the rateable value of the property could be reduced from £102,000* (the rate for “offices and premises”) to £1.00* (the rate for a “building undergoing reconstruction”) because the property could not be occupied due to the building work.

The decision is good news for developers because they will now be able to avoid paying substantial business rates on properties that they are renovating and improving.

Copyright drawings for property developers – the negative news:

A property developer was less successful in the recent case of Signature Reality Limited v Fortis Development Limited and Another (17 February 2017). In this case the developer had acquired land with the benefit of planning permission for a block of student flats. The permission was granted on the basis of various drawings which were prepared by the original developer’s architect. The drawings were published on the local authority’s planning portal with a copyright notice limiting the use of the drawings. However, the court found that the new developer had infringed copyright in the drawings.

The new developer had its own architect but had used the drawings for marketing and estimating purposes. They had also used them to make AutoCAD versions and to prepare ‘as built’ drawings. This was not permitted by the copyright notice. In the judgement, the judge refused to award additional damages for ‘flagrant breach of copyright’ and also refused to award an injunction against the new developer because it no longer owned the development. However, some damages will be payable for the copyright infringement and these will be assessed at a later date. The developer may also be liable for costs.

What can property developers learn from these decisions?

If a property developer is redeveloping or reconstructing a building and the building cannot be occupied they should apply to the Valuation Officer in order to reduce the rateable value to a nominal figure. E.g. £1.00 to reflect the fact that the property is incapable of beneficial occupation. Valuation Officers may still dispute whether the building is actually being redeveloped and whether the redevelopment work prevents the building being occupied and used. If an application to reduce the rateable value is rejected, property developers should consult a solicitor to check whether there are grounds to appeal the decision.

The lesson for property developers from the second case is that, whilst they are entitled to the benefit of a planning permission that relates to land they have acquired, they must take care not to infringe copyright in the drawings behind such a permission. Property developers should check the wording of any copyright notice carefully before using any drawings on the planning file. If there is any doubt, they should obtain advice from a solicitor.

For more information on business rates for property developers or copyright notices, please contact our Commercial Property team, on 0161 475 7676 or email [email protected].

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